Krugman nails it, again.

[Scuba]

http://www.nytimes.com/2012/06/01/opinion/krugman-the-austerity-agenda.html?_r=2&ref=opinion

The bad metaphor — which you’ve surely heard many times — equates the debt problems of a national economy with the debt problems of an individual family. A family that has run up too much debt, the story goes, must tighten its belt. So if Britain, as a whole, has run up too much debt — which it has, although it’s mostly private rather than public debt — shouldn’t it do the same? What’s wrong with this comparison?

The answer is that an economy is not like an indebted family. Our debt is mostly money we owe to each other; even more important, our income mostly comes from selling things to each other. Your spending is my income, and my spending is your income.

So what happens if everyone simultaneously slashes spending in an attempt to pay down debt? The answer is that everyone’s income falls — my income falls because you’re spending less, and your income falls because I’m spending less. And, as our incomes plunge, our debt problem gets worse, not better.

...

And there’s a clear moral to this story: When the private sector is frantically trying to pay down debt, the public sector should do the opposite, spending when the private sector can’t or won’t. By all means, let’s balance our budget once the economy has recovered — but not now. The boom, not the slump, is the right time for austerity.

[daaron]

1. What would it take it put Krugman in charge of the recovery? nt

[Zalatix]

2. The man ain't perfect but his record far outshines everyone else's.

This pretty much says it all.

http://articles.businessinsider.com/2011-05-02/entertainment/29979887_1_predictions-columnists-paul-krugman

[daaron]

3. Ayup! nt

[harun]

4. A liberal administration (which we don't have)

[hifiguy]

5. The good professor knocks it out of the park

again. Why aren't Krugman, Joseph Stiglitz and James Galbraith (to name but a few who have been right about 90% of the time for the last decade) listened to in DC??

[hay rick]

6. K&R

[ladjf]

7. K&R

[HughPeyor]

8. Krugman Must Not Be Paying Attention

Krugman says the government must spend. He must not be paying attention.

The country owes $15.7 Trillion dollars. That's the national debt. President Obama has added more to the national debt in his 3+ years than President Bush did in 8 years.

Does Krugman know that?

The Congressional Budget Office is forecasting the deficit will hit $1.17 trillion for the entire 2012 budget year.

Does Krugman know that?

[cyberswede]

9. Oh really...

From the Washington Post:

George W. Bush’s major policies increased the debt by more than $5 trillion during his presidency. Obama has increased the debt by less than $1 trillion.

Read the rest

[daaron]

10. Forgive me for saying so, but, "Bullshit." nt

[rgbecker]

11. Bush's recession, caused by GOP's lack of oversight of banks, has reduced

Everyone's income and by extension, total income tax collected. Of course there will be deficits until somebody can get people to start spending again. Krugman spells this out very well and you should know, it most probably will not happen until the government primes the pump with infrastructure spending.

Do you think Romney's experience at closing down businesses, sending jobs overseas for cheaper labor and stashing the savings in banks on the Caymen Islands is the answer?

Krugman is great at making this very clear and you should spend some time reading his explanations or maybe get out your old economic text books.

[SunsetDreams]

12. Yeah you are right Krugman Must Not Be Paying Attention

He's not paying attention to Faux "news" and their lies.

[DianaForRussFeingold]

14. “The boom, not the slump, is the right time for austerity.”

There were were some of the Biggest construction projects During The Great Depression!

"The 1930s witnessed major construction projects from coast to coast.
Millions of people found work through New Deal programs.
~ FDR was the first president to support unions.
~Under FDR, the Right To Collective Bargaining was Enacted into law when he signed the National Industrial Recovery Act.
~The Golden Gate Bridge employed union workers, because construction began after the New Deal had begun to offer such protection...."
http://www.pbs.org/wgbh/americanexperience/features/interview/goldengate-engineering/#.T8OxGJ6yoR4
"They Did It During The Great Depression, They Did It Without Computers,
they did it in mist and fog and wind and rain... and they did it in 4 years and 4 months.": http://www.democraticunderground.com/1002735062

"Wall Street Hated FDR Too": http://www.huffingtonpost.com/joe-lauria/wall-hated-fdr-too_b_163963.html

Glass-Steagall Act (1933): http://topics.nytimes.com/topics/reference/timestopics/subjects/g/glass_steagall_act_1933/index.html



HughPeyor, Did you know that?

[ProfessorGAC]

16. Utterly Ridiculous Comment

Displays an undeniable lack of macroeconomic acumen on your part.
GAC

[Scuba]

17. So, are you now paying attention?

[freshwest]

22. No, he's not! THANKS MIRT !!!

[girl gone mad]

18. The deficit needs to be even bigger.

And why do you think it matters that government "debt" is $15.7 trillion?

Does this personally impact you in some meaningful way? Why don't you take a whole 30 seconds to think about what that "debt" actually represents.

[Hissyspit]

20. Yes, he knows what the debt is.

I read him all the time.

You didn't know that he knows that. Also, your Obama comment is bullshit.

Not to mention, you seem to have missed his point.

[rateyes]

21. Of course he knows it. And, he knows how to fix it, too.

You are the one who should be paying attention....to him!

[Scootaloo]

23. Welcome to DU

Might I recommend watching "My Little Pony: Friendship is Magic" during your forthcoming extended hiatus? It's a really entertaining little show, I find.

[GeorgeGist]

13. The metaphor also fails ...

because it never includes the cash that daddy/1% has stashed in the Caymans.

[DLevine]

15. K&R. n/t

[girl gone mad]

19. Okay, so now Krugman is saying more of the right things.

I'd like to see him go a lot further than this. Why not embrace the MMT job guarantee, for example?

I really hope he will stop talking about the deficit altogether. Also, has he finally accepted the limitations of monetary policy? Remember, he argued that QE would work. HA!